White House Watch: Congress in focus as virus aid measure proposals balloon, while ‘Depression’ becomes the new watchword as deterioration deepens.
What seemed premature and too extreme one day turns into coronavirus response moves that appear to be too late the next day, and Congress grappled Wednesday with the challenge of keeping up with a moving target for relief spending that is moving past the $1.5 trillion mark.
The Senate in an afternoon vote passed the second coronavirus response package by an overwhelming 90-8 margin, to be signed into law shortly with work well underway on the much, much larger third-stage aid program for passage as soon as Friday.
Auto assembly plants set closedowns for Thursday as more and more analysts saw Depression-era unemployment on the near horizon and household cash drying up – the result of the biggest purposeful economic shutdown in history, one intended to slow down the spread of the deadly virus.
President Trump confirmed he is invoking the war-era Defense Production Act, giving him the power to command some manufacturers to switch to building respirators, masks, gloves and protective gear that is already running out at New York hospitals. He said he is ordering “thousands” of respirators.
Describing himself as a “war-time president”, Trump also confirmed military hospital ships, the Mercy and the 1,000-bed Comfort – “the big white ships with the red cross on the sides” – are being positioned off the New York shore and along the California coast “as needed” in the week ahead.
“I view it as a, in a sense, a war-time president,” Trump said. “I mean, that’s what we’re fighting…It’s a very tough situation.”
“I’m also announcing,” he said, “that the Department of Housing and Urban Development is providing immediate relief to renters and homeowners by suspending all foreclosures and evictions until the end of April” for mortgages insured by the FHA. Fannie Mae and Freddie Mac did the same for most of the rest of mortgage loans.
He said he is holding a news conference Thursday on unspecified developments related to the Food and Drug Administration. Trump did not comment on a Wall Street Journal story saying he is considering ordering the increased study of investigational drugs despite a warning that they could harm some patients – beyond saying he had not read the account.
Italy posted its biggest one-day increase in virus-caused deaths, 475, bringing the total there so far to near 3,000, with 319 of them in the northwest province of Lombardy. It is part of a steepening upward curve of infection and mortality the experts see potentially hitting the US as soon as two to four weeks if mitigation efforts are not as successful as hoped.
The Corona Virus Task Force response spokeswoman, State Department AIDS expert Deborah Birx, warned that as mass testing takes hold from now on, reported US infection rates will take a big jump, the catch-up effect as the extent of community spread so far is finally turned into numbers.
She also warned that new data from hard-hit Italy and France show the millennial generation more at risk than previously thought, while few fatalities are being recorded among healthy children. But social media videos were easily accessible showing some young people taking the “coronavirus challenge”, licking toilet seats.
Asked about reports from Australia that a coronavirus vaccine has already been developed, she answered, “There’s always anecdotal reports and we’re trying to figure out how many anecdotal reports equal real scientific breakthroughs.” Some success has been reported in other countries in fighting existing infections with drugs developed to fight Ebola and malaria.
The New York Times reported a 100-page internal government coordination document advised to prepare for a pandemic that could last 18 months. Asked about that, Trump said he doesn’t agree and that he is not anticipating the pandemic lasting nearly as long. He also disputed the unemployment rate could reach 20%, as Secretary of Treasury Steven Mnuchin reportedly told lawmakers at lunch Tuesday. Mnuchin said later that his was only a “mathematical” calculation based on non-government estimates.
The stock markets saw another trading halt when S&P losses hit the circuit-breaker threshold of 7%, to return with a brief bounce 15 minutes later – only to resume the downward path so evident during the Corona Virus Task Force midday briefing. Going into the close, however, a sharp rally trimmed the Dow industrials loss by 799 points, though not enough to take it back up above 20,000.
At the close, all those accrued gains during the Trump administration were still wiped out with the DJIA’s 6.3% or 1,338 point drop. The S&P 500 ended the day off 5.18% or 132 points. The Nasdaq fell 4.7% or 345 points. Overall, the day took the Dow 32.4% below its peak 36 days ago. Walmart decidedly bucked the trend, ending the day up 4.7%.
In the credit market, benchmark yields were climbing, a symptom of a rush for cash as even safe-haven investments like Treasury securities and gold were getting hit and all asset classes were correlated in their decline.
The prospect of the Saudi Arabian fight over oil prices with Russia continued to generate jaw-breaking drops in oil prices exacerbated by the destruction of demand. West Texas Intermediate was at $23.39 a barrel Wednesday, off 17% in a single day.
Noted business analyst Mohamed El-Erian, once PIMCO co-chief and now advisor to parent Allianz, told CNBC the country is now facing, not the recession he was anticipating just the day before, but a depression. Others already saw another Great Depression.
Hedge-fund head Bill Ackman did a “hell is coming” telephone interview with CNBC repeated through the day saying corporate America is being shut down and needed to be. In later tweets he emphasised he is buying hotel stocks, believes in an eventual recovery and just wanted to urge more rigorous mitigation efforts.
“I am confident the president will do the right thing in temporarily shutting down the country and closing the borders,” Ackman tweeted after his interview. “If that happens, we can win the war against the virus and the markets and the economy will soar.”
Boeing did not deny reports it is considering a strategic bankruptcy filing to preserve cash. One industry estimate was that most airlines would be bankrupt by mid-May were it not for the promised government support. Other pessimistic forecasts seemed as numerous as falling leaves almost on the eve of the official start of spring.
An industry group forecast 3.9 million hotel jobs are at risk in the near term. Trump said the administration is pressing Congress to direct aid specifically to certain industries, including hotel chains and one Treasury Department fact sheet said $150 billion of a total $1.3 trillion in proposed government spending would go in that direction.
“Certainly, the hotel industry, the cruise ship industry, the airlines,” Trump said, “those are all prime candidates, absolutely.”
As widely anticipated for several days, the US and Canada announced a mutual agreement to close their border to non-essential travel without interrupting trade flows. Canada Prime Minister Justin Trudeau announced government biweekly checks for those who are losing their source of income.
CNN reported those in the Trump administration opposed to immigration were pressing for a closing of the southwest border with Mexico and a rejection of all asylum seekers. All refugee entries were halted, the State Department said.
Trump responded: “No, we’re not going to close it,” he said. “But we are invoking a certain provision that will allow us great latitude as to what we do.”
There was reported disagreement within the White House on the executive order that Trump Tuesday said he is considering, directing medical supplies be produced only in the United States.
Meanwhile the IRS made it official, issuing guidance allowing all individual and other non-corporate tax filers to defer up to $1 million of federal income tax (including self-employment tax) payments due on April 15 until July 15 without penalties or interest. The guidance also allows corporate taxpayers a similar deferment of up to $10 million of federal income tax payments. The April 15 filing deadline, however, still applies.
A new report said under laboratory conditions the COVID-19 virus can stay infectious on hard surfaces like plastic and stainless steel for three or more days. While aerosol dispersion is neutralised much faster, it is still the major conduit of transmission.
With grocery stores being kept open, along with pharmacies, banks, hardware stores and medical facilities, efforts to keep the virus out of prisons in at least one instance was ending work-release programs in which prisoners help keep produce supply chains operating – and now can’t.